Tax Planning
Maximizing the One, Big, Beautiful Bill: Inflation Adjustments Every Tax Planner Must Know
Explore the key inflation updates under the One, Big, Beautiful Bill for Tax Year 2026—changes that affect your standard deduction, AMT exemptions, estate exclusions, and more.
By NomadicTax Research Team • 5-8 min read • November 16, 2025
## What Changed for Tax Year 2026
The IRS released major inflation-adjusted figures under the One, Big, Beautiful Bill (OBBB), effective tax year 2026, that will influence many taxpayers’ deductions, credits, and tax brackets. These changes include:
- **Standard Deduction** increases: single filers and married filing separately will have $16,100; married filing jointly, $32,200; heads of households, $24,150. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Alternative Minimum Tax (AMT) exemption**: for unmarried individuals $90,100, phasing out at $500,000; married filing jointly phase-out begins at $1,000,000. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Estate Tax Basic Exclusion**: raises to $15,000,000 from $13,990,000. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Foreign Earned Income Exclusion**: increases to $132,900, making it easier for expats and travelers to reduce U.S. taxable income. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
- **Additional credit and benefit adjustments**, like Employer-Provided Childcare Tax Credit, increases to qualified transportation fringe benefit limits, FSA caps, among others. ([irs.gov](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill?utm_source=openai))
## How These Changes Affect Planning
These inflation adjustments create planning opportunities:
### Itemize vs. Standard Deduction
With the standard deduction rising, many filers who once benefited from itemizing may find the standard deduction more appealing. It makes sense to run an itemization analysis if your deductions (mortgage interest, state and local taxes, charitable contributions) approach the new standard deduction levels.
### Estate Planning Timing
If you were considering gifting or transferring assets using the current estate exclusion, doing so before year’s end could let you take advantage of the old exclusion amount. Big gifts under the threshold may be subject to future scrutiny if law changes again.
### Expat and Digital Nomad Considerations
If you live abroad or qualify under bona fide residence or physical presence test, the foreign earned income exclusion increase helps—but make sure other limits (housing exclusion / deduction) are still tracked.
## Practical Action Steps
- Re-estimate your 2026 tax liability now, including your AGI, itemized deductions, and whether the new standard deduction benefits you.
- If you recently purchased a home, check whether mortgage interest + property taxes + other deducible expenses will exceed the new standard deduction.
- Plan charitable giving: Larger discretionary gifts might tip you into itemizing if you're close to threshold.
- For business owners and employers: watch for changes to fringe benefit limits (parking, transportation, FSAs) and adjust benefits offerings accordingly.
By aligning your decisions with these updated thresholds, you can avoid surprises and potentially save on your 2026 tax return. Contact a tax professional for personalized guidance, especially if your situation involves complex deductions or cross-border income.